The People’s Bank of China (PBOC) used its targeted medium-term lending facilities (TMLF) to supply 267.4 billion yuan in credit to certain commercial banks on 24 April, as part of efforts to improve financial inclusion for Chinese small businesses.
PBOC said that the one-year rate for the TMLF was 3.15%, in line with the first round of TMLF, as well as 15 basis points below its medium-term lending facilities (MLF).
The move marks the second time that the Chinese central bank has made use of TMLF to expand liquidity after first debuting the instruments in December, as a means of encouraging lending to smaller firms instead of large state-owned enterprises.
Observers say that the move signals increased use by the Chinese central bank of targeted liquidity tools to improve financial inclusion and direct funds towards parts of China’s economy where they’re more urgently needed, as opposed to the deployment of broader monetary expansion.
Since the start of April PBOC has denied reports that it would cut the required reserve ratio on two occasions, as well as called for China’s public security authorities to investigate rumour mongering.